Open-Shop Contractors' Applicant Referral Program Ruled Unlawful

The National Labor Relations Board (NLRB or Board) has struck down an applicant referral system for open-shop electrical contractors run by the Greater Houston chapter of the Independent Electrical Contractors association (IEC), finding that it unlawfully discriminated against union "salts."   In 1990, IEC established a centralized employee applicant referral system for its member contractors that operated similarly to a union hiring hall.  IEC would advertise for electricians, accept and sort applications, and provide them to interested member firms.  IEC also offered members a "shared man" program, which enabled members who needed additional workers to "borrow" employees from each other for up to 60 days under certain circumstances.  Meanwhile, in the early 90's, the International Brotherhood of Electrical Workers (IBEW) launched a "salting" campaign known as COMET that targeted IEC members and other open-shop contractors.  As part of the campaign, IBEW salts filed over 200 applications through the IEC referral service over the course of about two years, often indicating on their applications that they were union members and intended to engage in organizing activity if hired.  None of the salts was hired.  In 1996 and 1997, IBEW Local 716 filed unfair labor charges against the IEC and three of its member-employers for maintaining an allegedly discriminatory referral system and for discriminatory refusal to hire three particular union organizers. The Board agreed with the union, finding that the referral system violated Section 8(a)(1) of the National Labor Relations Act, because, "in its totality, [it] hindered the efforts of applicants who were salts and union members to be hired by IEC employer members, and reasonably tended to interfere with those applicants' right to seek employment on equal terms with other applicants."  The Board cited four main reasons in support of its conclusion.  First, the Board pointed to various statements published in the IEC newsletter indicating that the referral system helped IEC members avoid salting.  Second, the Board relied on certain components of the referral system that disadvantaged union-member applicants, including the IEC's failure to keep records of use of the service; its policy of not revealing to applicants which contractors received or reviewed their applications; its policy of not permitting applicants to review their applications; a $50 per-application fee that IEC imposed in 1997 on all applicants who filed more than one application within a 30-day period with the exception of recently laid-off former employees of IEC members; and IEC members' practices of reviewing only applications that had been filed within the last few days.  Third, the Board felt that the IEC's shared man program, by its operation in tandem with the referral system, tended to further ensure that union members would not be hired.  Fourth, the Board noted that demand for skilled electricians in the Houston area was quite high during the relevant period, making it reasonable to expect that any competent applicant would have been quickly hired. The Board also agreed with the union that the IEC members refused to hire the salts based on unlawful, anti-union discrimination.  The Board applied the framework for analyzing such cases established in its 2000 FES decision, which requires that the NLRB general counsel first demonstrate that:  (1) the employer was hiring, (2) the applicants had the training or experience required for the jobs, and (3) anti-union animus contributed to the decision not to hire the applicants.  If the general counsel meets this burden, then the burden shifts to the employer to show that it would not have hired the applicants even in the absence of their union affiliation or activity.  If the employer fails to do so, then a violation of NLRA Section 8(a)(3) is established.  The Board found this to be the case with each of the three employers involved here. AGC chapters that sponsor applicant referral systems on behalf of their members are advised to review the operation of the system with qualified labor counsel in light of this decision.  Beyond that, the case is mostly significant for signaling the pro-union opinions that can be expected of the new Board. KenMor Electric Co., Inc., 355 NLRB No. 175 (Aug. 27, 2010).